Swinburne questions Bank of England chief

07-Dec-2015 @ 1:0

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Conservative Spokesman on Economic Affairs, Kay Swinburne, has addressed Mark Carney, Governor of the Bank of England, speaking in the European Parliament's Economic Affairs Committee in his capacity as Chairman of the European Systemic Risk Board.

Her questions focussed on the overlap between EMIR, which mandates central clearing of derivatives, and CRD IV which is European legislation on Basle III, in particular the leverage ratio.

"It seems that the leverage ratio in CRD IV could require bank clearing members to hold capital against client initial margin deposits mandated under EMIR that are not bank activities and are covered by a CCP default fund.

"It is clear this is already having a detrimental effect in the US where some clearing members have already withdrawn entirely from offering clearing services and others have reduced their client exposure"

"It was heartening to hear that Mark Carney agrees this is a high priority issue and could result in the financial system not getting the full benefits of central clearing.

"He said clearly that this should be at the top of the list of issues to address at the FSB and irrespective of discussions there, the EU should take a cautious approach to the leverage ratio, looking holistically at how it will affect the rest of the system. Taking the US approach did not seem to even vaguely be an option.

"I agree with his view that more concentration in fewer clearing members would mean we are not addressing the systemic risk problems we set out to address when the G20 mandated central clearing in 2010."

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